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Gulf Finance House gets Credit rating |
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Middle East -
Islamic Investments
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Source: Shariabanking.net
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Wednesday, 30 August 2006 |
GFH announced
today that it has been assigned an investment credit grade rating of
BBB- by Standard & Poor’s (S&P), one of the top two
international rating agencies. GFH is the first Islamic investment bank
to be awarded an investment grade credit rating by S&P. The rating
applies to GFH as an institution and any senior unsecured long-term
obligations it might have. The credit rating on GFH’s short-term
obligations is A-3, which reflects strong liquidity. The outlook on the
rating is stable indicating that it is likely to remain unchanged in
the medium term.
In its report, S&P said: “The ratings
on GFH reflect its solid capitalization, strong liquidity, robust
financial performance, and unique position in its niche market.”
S&P also said: “GFH has recorded strong financial performance since
its inception in 1999, benefiting from the Gulf infrastructure boom.
Stellar return on equity (ROE) is all the more impressive considering
that the bank’s capitalization ratios are among the highest in the
region, with adjusted common equity at 41% of adjusted assets at March
31, 2006. Given the bank’s current business model, we consider high
capitalization as appropriate. Due to its high liquidity, GFH is not
likely to face balance sheet risks in the medium term.”
S&P also noted that “GFH faces limited direct competition and has
managed to build a unique market position despite its short history.
Since its inception seven years ago, GFH has been very successful in
delivering very high returns to its investor base. GFH’s success so far
has been dependent on its origination skills either in identifying
undervalued companies and ventures seeking private placements, or in
developing projects from scratch thanks to investors’ seed capital.”
With regard to the stable outlook, S&P said: “The stable outlook
reflects our expectations that GFH will remain adequately capitalized
and liquid in the medium term. Also embedded in the stable outlook is
our opinion that GFH, facing limited direct competition, will benefit
from the vast inflow of untapped and lucrative investment opportunities
in a region witnessing unprecedented economic momentum.”
Commenting on the rating, Peter Panayiotou, GFH’s Deputy CEO and Head
of Investments, said that the assignment of an investment grade rating
by S&P represents its strong confidence in GFH’s financial strength
and business model. “S&P has ranked GFH’s creditworthiness on an
international scale based on a set of rigorous criteria and has given
us this favourable rating. GFH thereby joins a small group of banks in
the region that are rated by international rating agencies and is the
first Islamic investment bank to be rated by S&P.
“Our decision to seek a rating for GFH reflects our forward-looking
strategy to continue to position GFH as a leader among Islamic
investment banks and to assess our business model and performance
against international criteria. With this debut rating and subsequent
rating reviews and reports, we will be in a better position to tell our
story to future counterparties and potential business partners from
other parts of the world who are not necessarily familiar with Islamic
investment banking or the region.”
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Last Updated ( Sunday, 07 January 2007 )
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